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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

In recent updates, we have highlighted various short-term permutations in the way price development is unfolding for U.S. stock indices, particularly the S&P 500, Dow Jones (DJIA) and Nasdaq. The S&P’s relative underperformance compared to European indices is understandable given the new monetary easing policies of the European Central Bank. This is maintaining a bearish S&P wave count that began from the late December high of 2093.55 with next key resistance slightly### below, around 2075.00+/-. Should the S&P trade to these levels during the coming week, then stage price rejection and a subsequent reversal signature, then such action would confirm a bearish outlook for the next few months with interim downside targets returning to the Oct.’14 low of 1825.00+/-. Equally balanced is the more bullish scenario that will be adopted upon a break above 2093.55. This describes an ongoing five wave impulse advance that began last October from 1820.66 with upside targets to 2257.49+/-. At this stage, our preferred scenario remains with the bearish count whilst European indices are closing in on original upside targets which are only a few percentage points above current levels. Our benchmark Eurostoxx 50 index retains upside targets towards 3475.00+/-. How this reacts once reached will clarify the S&P’s ongoing action for the next few months. In Asia, the Shanghai Composite index continues higher but its upward trajectory is showing momentum loss forewarning of a more imminent top formation during the next few weeks. India’s Nifty 50 has reached interim upside targets towards 8900.00+/- but failure to stage price rejection would confirm ongoing upside momentum to 9550.00+/-. In Japan, the short-term pattern confirms a bullish approach for the next couple of weeks with min. upside targets towards 18500.00+/-. 26th January 2015

Financial Updates Currencies

Currencies (FX)

Because of the current news-flow, we are focusing on the Euro/US$ and skip the US$ in this issue. The strong fib-price-ratio convergence area between 1.1487 and 1.1445 has been exceeded after the ECB announced its quantitative easing plan. This brings into focus two different scenarios. The first depicts the currency pair having traded into strong support at 1.1160-50 which is based on the weekly and intra-hourly time-frame data. Although the actual low stretched a bit lower towards 1.1115, it is still in the right territory to begin a sustained advance from here that would validate the completion of primary wave A or cycle wave B. ###The second scenario admits of lower levels to be achieved during the next weeks – a fib. 61.8% extension of the 1.6040-1.2329 decline measures to ultimate downside at 1.0479 that is closely matched by a fib-price ratio based on the decline from the Dec.’14 high that projects to 1.0544. This second count has the advantage that it maintains the previous fib-price-ratio targets for completion to 1.1460 but incorporates the point of ‘5th wave extension’ as the ECB news prolong downside momentum. Meanwhile, Sterling has traded into idealised downside at 1.4988 with a traded low of 1.4951. Now, a reversal signature is imminent – Sterling is very close to its July ’13 low of 1.4813 and a break below there would invalidate the upside momentum in force from there. In fact, a decline below 1.4813 would render the entire sequence from the Aug.’09 high of 1.7044 as an expanding flat correction that is engaged in its finalising ‘C’ wave with subsequent downside measured to 1.3858+/- in the months ahead. Preferential counts however maintain the bullish outlook – in Elliott Wave terms, a deep 2nd wave counter-trend decline (as here from 1.7192) is nothing extraordinary which reinforces the possibility of upside acceleration from current levels as a larger 3rd wave. US$/Yen has not gained much upside during the last trading sessions but is still in a good position to begin its 3rd wave upside acceleration. This is also in line with the Nikkei’s forecast which is projected to trade into new highs in the weeks ahead. Only a break below critical support at 11556 (the Dec.’14 low) would invalidate an immediate upside progression as it would confirm the December high of 12185 as the completion of primary wave 1 and thus reinforce a sustained decline in the months ahead. 26th January 2015

Financial Updates Bonds

Bonds (Interest Rates)

Mario Draghi’s statements in last week’s ECB meeting produced little effect on markets during his delivery, but it was only later during questioning that he revealed the Central Bank’s intention to include short-dated maturity bond-buying in its portfolio of quantitative easing that begins in March. This was a surprise because most short-dated bond yields are already trading below zero 0.00%. Traders are ###falling over themselves to buy what is still available prior to the commencement of the ECB’s programme. This has driven yields lower once again with the benchmark DE10yr yield trading to 0.306%. This is marginally below our interim downside target of 0.333% but we still expect to see some counter-trend retracement begin soon as a five wave impulse decline is close to completion unfolding from last July’s high of 2.051%. Meanwhile in the U.S., the US10yr yield has undergone a counter-trend upswing from the mid-Jan.’15 low of 1.706 ending last week at 1.943. The trend remains downwards but this rally could extend a little higher towards 1.990 in the short-term. 26th January 2015

Commodities

It’s been exactly one week since gold stretched above the April ’14 ‘overlap’ level of 1277.30 that defined the finalising sequence of its multi-year corrective decline that began from the Sep.’11 highs. Gold mining stocks such as Newmont Mining and Gold Corp. have surged higher from mid-December lows, themselves crossing above key resistance levels along the way. This significantly increases the probability that a major directional change has occurred for precious metals, ###confirming a new multi-year uptrend has begun the final phase of the ‘inflation-pop’. One cautionary note however that dampens our bullish enthusiasm is the fact that the GDX and bullion gold have just traded into interim overhead resistance at 23.22 and 1307.40 respectively and are losing upside momentum into these levels. Now this may be just coincidence prior to some profit-taking retracement with continued advances during the coming week – but there does exist some risk of a more meaningful corrective decline back inside the trading range whilst prices remain below these resistance levels. The risk of a deeper correction will be averted should prices break above during the next few trading days. Silver has likewise traded into interim resistance at 18.49+/- and is also open to some short-term risk of retracement declines although an examination of its substructure from its secondary low of 15.54 suggests more upside to come. Crude oil has withstood a stronger US$ dollar during the last week with prices remaining above the mid-January low of 44.20. This is a bullish sign as the preceding upswing to 51.27 clearly unfolded into an intra-hourly five wave impulse pattern. Last week’s secondary low at 45.35 must now hold to maintain next upside targets towards 56.20 and later to 62.10. 26th January 2015

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES